In 2004, for instance, its China revenue jumped 40 per cent from the year before.
But there was a problem - its local stores were not profitable.
In this regard, IKEA's low-price strategy seemed to create confusion among Chinese consumers.
The company realised this and started targeting the young middle-class population.
American customers, for instance, demanded bigger beds and bigger closets.
Ikea Case Study Business Review Different Problem Solving Methods
IKEA had to make a number of changes to its marketing strategy in the US.IKEA identified the strategic challenges and made attempts to overcome them.One of the main problems for IKEA was that its prices, considered low in Europe and North America, were higher than the average in China.The store layouts reflected the typical sizes of apartments and also included a balcony.IKEA had faced similar problems previously when it entered the United States.Prices of furniture made by local stores were lower as they had access to cheaper labour and raw materials, and because their design costs were usually nil.IKEA built a number of factories in China and increased local sourcing of materials.: IKEA is known globally for its low prices and innovatively designed furniture. Its low-price strategy created confusion among aspirational Chinese consumers while local competitors copied its designs.This case study analyses how IKEA adapted its strategies to expand and become profitable in China.While globally 30 per cent of IKEA's range comes from China, about 65 per cent of the volume sales in the country come from local sourcing.These local factories resolved the problem of high import taxes in China.